Digital Handshake of High Velocity Cryptocurrency Trading Platforms with Robust Scalable ERP Systems

Published on July 16, 2019

Introduction

Information Technology with its own currency creation, which we call “Cryptocurrency”, has transcended itself trying to be at par with the monetary strength of the Fiat Currency. While the Trading Platform of Cryptocurrency runs business transactions at the speed of light, the medium of maintaining business records still relies on a relatively slower speed Accounting Platform i.e. ERP Applications. It is our pleasure to herewith share some of the nuances of implementing Oracle Cloud ERP in an organization, running Cryptocurrency Trading Platforms in multiple countries.

Our project objective was to build a back office IT systems where the Cryptocurrency Trading Platform seamlessly integrates with Oracle Cloud ERP applications serving as systems of records. This engagement has been an exciting experience. It provided great insights to the maneuverability that creative Finance SMEs can apply to the versatility offered by Oracle Cloud ERP Applications. We herewith make an attempt to share some of our learnings on select nuances of the Application Design with the hope and intent that some of it may be of help to readers either directly or indirectly in their work areas.

Chart of Accounts

Each Oracle ERP practitioner acknowledges that the “Charts of Accounts” design is at the heart of product configuration to make the implementation a success. The business of cryptocurrency is very nascent and hence ever changing. Within such changing dynamics, the COA design had to keep in view the known asks of today plus the unknown trends and envisaged needs of tomorrow. The COA design therefore was required to be agile, yet not un-wieldy. Pure trading details of cryptocurrency is maintained in the trading system, which feeds data to Oracle Cloud ERP. The mapping of right data fields of trading systems in to the Oracle COA such that it gives adequate comprehensiveness of reporting was challenging. At this juncture the flexibility of having three balancing segments in Oracle Cloud ERP proved to be the savior.

Exchange Gain & Loss

A unique feature in this implementation was that while Cryptocurrency is in itself a pseudo-currency, it is traded with Fiat Currencies (US$, Euro, Yen, etc.). To add, the cryptocurrency trading platform transacts in multiple types of Cryptocurrencies (Bitcoin, Ethereum, Litecoin, etc.). The exchange values of Cryptocurrencies change continuously vis-à-vis the Fiat Currency used for transacting. The exchange rates of these fiat currencies also change against the benchmark currency on a continuous basis. Example: Value of US$ vs Euro changes every second on the Fiat Currency Exchange. The Oracle Cloud ERP applications therefore has to maintain these Cryptocurrencies as a separate currency. It also has to update exchange rates at regular intervals. The changes to the value of cryptocurrencies is to be treated as exchange gain and losses. At day closure, the closing balances are to be recorded and exchange gain / loss is to be posted to GL. These transactions are important and sensitive. Accuracy up to the defined decimal level is of significance. It is at this point, successful configuration achieved with robustness of the Oracle Cloud ERP product coupled with the finesse of the Financial Consultant deserves kudos.

Ledger Balances

Individual customer data is maintained in the trading system and synchronized with Oracle Cloud ERP Systems. All executed transactions during the day are interfaced with Oracle ERP in Cryptocurrency values and Quantities. When the Cryptocurrency Trading Platform operating company has its operations spread across multiple countries, to maintain Legal Compliances in each country, it is imperative that the Ledgers and the COA are synchronized for each country of operation. Further, at the global parent company level, there is also a need to have Cryptocurrency balances consolidated in the parent company Oracle General Ledger. This is a must for Management Reporting, Risk Management and Regulatory Compliance in the country where the Parent company is registered. This exercise has to be executed on a daily basis. The combination of features of Oracle ERP product, such as reporting ledger, currency translation and Financial Accounting were used to meet such business requirement.

Risk Management

Cryptocurrency trading is an extremely volatile market. The rules applicable are akin to that run for Commodity Exchange or a Stock Exchange, probably more stringent. The trail balance is generated every day from Oracle Cloud ERP applications. Cash position and current asset position report are closely monitored by CxOs. The challenging part is to provide a single solution with unified COA structure that fits right to different countries within the boundaries of legal and regulatory compliance and robust reporting that enables risk containment. Since there are multiple country operations with each country having its own unique cryptocurrency trading platform, timely and accurate collection of volumes of data, its standardization and transformation and loading in to Oracle Cloud ERP on a daily basis.

Some critical and sensitive execution aspects experienced in the implementation of Oracle Cloud ERP Applications in such multi country scenario include:

  • Single solution to make it fit into various business units in different countries with local compliance and regulations & Unification of Chart of account
  • Different corporate calendars and ledgers to meet different regulatory compliances and group level requirements
  • Mapping of COA across Trading system and local requirements for each country
  • Collection, Standardization and conversion of data as per Oracle Financial Cloud
  • Integration with Blockchain platform and limitation of number of currencies in Fusion Finance.
System Integration Overview

Business Benefit of Implementing Oracle Cloud ERP

Despite the challenges, end experience is very satisfying. Meticulous consideration of business requirements enables to build an application architecture that facilitates online real time control on finance and accounting aspects coupled with a best in class transaction and management reporting out of the box. Information Technology through the well-designed integrated ERP Platform became a key business dependent factor in effective decision making supported by accurate facts and figures. A good amount of data redundancy and duplication was avoided. High degree of satisfaction was gained among the stakeholders as a mix of employees, customers, suppliers and the most important one, regulatory bodies :). All in all, it was a great enriching experience that brought learning to a higher plane.

Disclaimer: The views presented herewith by the co-authors are of their own and hold no bearing on any one including their employers, Oracle Corporation or any other entity. It is advised to Readers to make their own independent evaluation in their decision-making process.